Minneapolis coin dealer accused in $2.7M fraud released to halfway house

A federal magistrate ruled Monday, Nov. 19, that an Excelsior coin dealer accused of cheating customers and investors out of $2.7 million could await his January trial in a halfway house instead of jail.

David Laurence Marion will have to surrender his passport and must wear a device that will track his whereabouts via GPS.

Marion was jailed Thursday after a federal grand jury indicted him on counts of conspiracy, securities fraud and money laundering.

At an arraignment and detention hearing before U.S. Magistrate Tony Leung in St. Paul, Marion entered a plea of "not guilty," and his lawyer sought his release. But a prosecutor argued that Marion -- who marked his 52nd birthday Saturday in the Sherburne County jail -- was an "ongoing economic threat" who should stay behind bars.

"The defendant is not a flight risk but he is an ongoing danger to the community," Assistant U.S. Attorney Karen Schommer told the judge.

She listed a litany of problems. Chief among them: He had tested positive for amphetamines after his arrest and had been through rehab this year, and he had a serious gambling addiction.

Schommer said that describing Marion's gambling as a problem is "to state it mildly." She said he often spent company assets on his casino sprees and that they continued unabated even after he learned he was under investigation for fraud.

Marion owned International Rarities Corp., or IRC, a Minneapolis company that trafficked in gold coins and precious metals.

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But the indictment alleges that from late 2010 through August 2011, customers paid the company about $2 million to buy or exchange for coins and precious metals, but that the orders were never filled.

When the customers asked about the status of their orders, they were lied to, the indictment alleges.

In August 2011, International Rarities filed for bankruptcy, listing assets of $1.3 million against liabilities of $3 million. The list of creditors stretched from coast to coast.

In March, the U.S. Securities and Exchange Commission sued Marion and the company he incorporated in Nevada in 2009, International Rarities Holdings Inc., or IRH, accusing them of conducting "a fraudulent, unregistered offer and sale of approximately $1 million in securities."

In that case, the SEC alleged that Marion told investors they were buying shares of IRH, which he said was the parent company of IRC. Securities regulators said that the claims were false because IRH never owned IRC and that Marion was selling investors shares of a worthless shell company.

In arguing for continued detention, Schommer said that investigators had received more complaints about Marion's business dealings that were done even after they began investigating him and raided his Minneapolis office.

"He cannot stop," she told the judge.

Defense attorney Craig Cascarano said that Marion's gambling problem has "never been in dispute," but that the coin and precious metal trade was "an unusual business" and that Marion did nothing wrong.

He said that while some of Marion's actions might seem like "criminal conduct, one could come to that conclusion, but that's not the case."

Cascarano also said that Marion had a prescription for Adderall, a medication that contains an amphetamine and is often used to control symptoms of attention-deficit hyperactivity disorder, which the lawyer said his client had.

Leung said that with appropriate conditions, Marion could be released to a halfway house. Among the conditions: He can't use a computer, and he can use a phone only to speak with his lawyer or his kids. He also can't have any job related to coins or securities or other financial transactions.